Ice melt opens Arctic trade routes: impact on Singapore

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Companies building ships, developing ports and those involved in green technology could benefit from new business opportunities as Russia looks to develop the frosty region.

But the Republic could also lose out on trade from vessels heading from Europe to north-east Asia, as they skip Singapore and head straight to northern China, Japan and South Korea via the Bering Strait - a shorter route than the Suez Canal and Malacca Strait.

Still, experts remain optimistic that Singapore would not be hit too hard either way.

Goods and raw materials originating in South-east Asia would still need to be picked up from Singapore before being shipped to Europe, said Mr Wong Siew Chuang, a senior consultant at independent maritime adviser Drewry.

‘It will have an impact on Singapore, but not too big,’ he said.

Others note that the Arctic route, known as the Northern Sea Route, is passable only in the summer months, when the ice is sufficiently melted. And even then, the threat of ice remains.

Russia currently charges ships about US$200,000 (S$242,000) for one of its nine atomic-powered ice-breakers to accompany them in case of ice.

‘Whether or not the route becomes commercially viable will depend a lot on whether Russia reduces this fee,’ noted maritime analyst Joshua Ho at the S. Rajaratnam School of International Studies (RSIS) at Nanyang Technological University.

The opening of the Arctic route could also bring more business opportunities for ship and oil-rig builders, as Russia’s arctic shelf is believed to contain the equivalent of more than 100 billion tonnes of oil.

Singapore-based Keppel Offshore & Marine has already grabbed a slice of the action, securing a $260 million deal to build two ice-breaker vessels for Russian oil company Lukoil in July 2006.

It also signed an agreement with Lukoil to cooperate on building new platforms and delivered a string of other specialised ships, including tugboats, supply vessels and rescue vessels designed for use in freezing temperatures.

RSIS’ Mr Ho said business opportunities could also crop up for port operator PSA International, as ports may need to be developed on the periphery of the Arctic.

The Arctic Council will also want to ensure the fragile ecosystem in the region is preserved, he added, and Singapore’s green technology sector could help develop greener ships that have low carbon emissions and are more energy-efficient.

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